What is point of SSL if fiddler 2 can decrypt all calls over HTTPS?

This is covered here: http://www.fiddlerbook.com/fiddler/help/httpsdecryption.asp

Fiddler2 relies on a "man-in-the-middle" approach to HTTPS interception. To your web browser, Fiddler2 claims to be the secure web server, and to the web server, Fiddler2 mimics the web browser. In order to pretend to be the web server, Fiddler2 dynamically generates a HTTPS certificate.

Essentially, you manually trust whatever certificate Fiddler provides, the same will be true if you manually accept certificate from random person that does not match domain name.

EDIT: There are ways to prevent Fiddler/man-in-the-middle attack - i.e. in custom application, using SSL, one can require particular certificates to be used for communication. In case of browsers, they have UI to notify user of certificate mismatch, but eventually allow such communication.

As a publicly available sample for explicit certificates, you can try to use Azure services (i.e. with PowerShell tools for Azure) and sniff traffic with Fiddler. It fails due to explicit cert requirement.

You could set up your web-service to require a Client-side certification for SSL authentication, as well as the server side. This way Fiddler wouldn't be able to connect to your service. Only your application, which has the required certificate would be able to connect.

Of course, then you have the problem of how to protect the certificate within the app, but you've got that problem now with your username & password, anyway. Someone who really wants to crack your app could have a go with Reflector, or even do a memory search for the private key associated with the client-side cert.

There's no real way to make this 100% bullet proof. It's the same problem the movie industry has with securing DVD content. If you've got software capable of decrypting the DVD and playing back the content, then someone can do a memory dump while that software is in action and find the decryption key.